Survival of the fittest

Real estate developers will expose stronger competition with abundance of glittering products in 2011, but opportunities are open for new investment.
Rapid urbanisation means the thirst for apartments will roll on into 2011

John Gallander, managing director of Knight Frank Vietnam, said the real estate market would steadily develop and customers would have easier access to the products and more choices.

Real estate developers would focus more on the quality of design and schedule of projects, Gallander told a seminar on Vietnam Real Estate Market held last week in Hanoi, jointly organised by Knight Frank, CapitaLand and Standard Chartered Bank.

Gallander said the real estate index, now being set up by Ministry of Construction, would create a more transparent market for customers.

The Ministry of Construction (MoC) declared that since the first quarter of 2011 the real estate price index would be set up in Hanoi, Ho Chi Minh City, Danang and Can Tho.

Planned to launch in the third quarter of 2011, the index will include residential, land and office for lease.

According to the MoC, the index will be calculated on the real transaction in a certain area, but not based on the prices fixed by the project’s investors.

Meanwhile, CapitaLand Vietnam said the increasing population, urbanisation and people’s income meant demand for accommodation in Vietnam would be still huge in 2011.

Nguyen Thuy Duong, a representative from CapitaLand Vietnam Investment Department, estimated demand from new household formation and graduate couple between 25 and 29 years old was huge.

With the population size of this age of around 2.2 million in urban area, estimated demand in Hanoi and Ho Chi Minh City is around 132,000 units. This figure is larger even than the total current housing stock of 115,000 units in these two cities.

CapitaLand also noted that Vietnam real estate market now had relatively low apartment selling price but high land cost compared with other key cities in the region. The long time required since local developers acquired the land until the launch of the project and low transparency were two existing hurdles for investors, Duong said.

Investing in real estate, Gallander said, investors would receive investment return of between 5 to 15 per cent, or an average of 10 per cent annually, a percentage which was rather stable than other channels.